Exacerbations are the key drivers in the costs of chronic obstructive pulmonary disease (COPD). The objective was to examine the costs of COPD exacerbations in relation to differing degrees of severity of exacerbations and of COPD. We identified 202 subjects with COPD, defined according to the BTS and ERS criteria. Exacerbations were divided into mild (self-managed), mild/moderate (telephone contact with a health-care centre and/or the use of antibiotics/systemic corticosteroids), moderate (health-care centre visits) and severe (emergency care visit or hospital admission). Exacerbations were identified by sending the subjects a letter inquiring whether they had any additional respiratory problems or influenza the previous winter. At least one exacerbation was reported by 61 subjects, who were then interviewed about resource use for these events. The average health-care costs per exacerbation were SEK 120 (95% C=39-246), SEK 354 (252-475), SEK 2111 (1673-2612) and SEK 21852 (14436-29825) for mild, mild/moderate, moderate and severe exacerbations, respectively. Subjects with impaired lung function experienced more severe exacerbations, which was also reflected in the cost of exacerbations per severity of the disease during the 4 1/2 month study period (ranging from SEK 224 for mild to SEK 13708 for severe cases, median SEK 940). Exacerbations account for 35-45% of the total per capita health-care costs for COPD. In conclusion, costs varied considerably with the severity of the exacerbation as well as with the severity of COPD. The prevention of moderate-to-severe exacerbations could be very cost-effective and improve the quality of life.